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Cryptologic CRYP:Nasdaq, CRY:TSE (updated 2000.08.06)
1. CryptoLogic Inc. is the leader in the growing online gaming industry, with more revenue and profit than any online gaming company. To date in 2000, CRY has added to the 100% gain in share price posted in 1999, driven in part by Nasdaq approval, but also by the launch of the live version of williamhillcasino.com and the signing of Jupiters, a leading Australian land-based casino. CRY has followed up with four additional licencees. These recent licencees have firmly established CRYP as the premier gaming software developer, and are expected to lead to more high-profile licencee signings in 2000 and beyond.
2. Bear Stearns released a 100 page research report on Internet gambling. The report was written by all-star gaming analyst Jason Ader. The headline from their press release on the report asked: "Is Internet Gambling the Next Internet Explosion? Bear Stearns unveils a comprehensive report on what could be the next big investment opportunity on the Internet"
3. Bear Stearns’ research report includes CRY in a list of companies to watch, that are likely to "survive future changing market conditions throughout the world." Mr. Ader describes CRY as "the company with the largest market share in Internet gaming."
4. CRY’s corporate website at cryptologic.com includes company info plus all press releases and financial statements. Frequently asked questions from investors are summarized at cryptologic.com .
5. Trades as CRYP on the Nasdaq National Market and as CRY on the Toronto Stock Exchange.
6. CRY has recently been added to the TSE300 Index.
7. CRY closed Friday at C$35.50 on the TSE, for a market cap of C$550 mm, and US$23.75 on the Nasdaq, for US$370 mm.
8. Weiss, Peck & Greer, an investment manager with $16 billion under management, has acquired 1.67 million shares in CRYP (as of June 8), including 575,000 shares (of 2.4 mm traded) on January 12, 2000, and adding about 240,000 shares since then. Adam Smith & Company and R-H Capital are among the other US-based investment firms purchasing shares in CRYP.
9. Altamira’s e-business fund holds CRY " manager Ian Ainsworth listed CRY as a top pick in a recent Stockhouse interview.
10. The company’s application for NASDAQ listing was sponsored by Salomon Smith Barney, Fahnstock and Pacific Crest Capital.
11. CRYP has developed an e-cash product used in their licenced casinos, that is now housed in a separate division. CRYP has said they intend to create a separate company for e-cash, likely involving a rights offering to shareholders and an IPO for the new company. CRY is expected to announce a financial advisor for the e-cash business soon.
12. CRY’s flagship casino at intercasino.com, the biggest and best online casino, was launched in November, 1996, and now has over 230,000 registered users. CRY has 19 licencees, with some hosting multiple casino sites. Total registered users for all licencees now exceed 580,000.
13. CRYP licenced a casino to William Hill, the second largest betting shop in Britain (with over 1,500 offices). That casino, at williamhillcasino.com, is now taking real-money bets. CRYP has stated that the response has exceeded their expectations, and that Will Hill may grow to become their second largest licencee within a year.
14. CRYP has signed an agreement with Jupiters, a leading land-based casino in Australia, to launch an online casino in Australia’s regulated environment. Jupiters described it as a 50/50 joint venture. A multi-lingual "play-for-fun" version will be up shortly, with the real money version to follow (after the software receives regulatory approval.).
15. CRYP has signed an agreement with International Thunderbird, and launched an online casino targeting Spanish and Portuguese speaking countries. CRYP offers a Spanish version of their casino software, with Portuguese (and other languages) to be added soon. Thunderbird owns land-based casinos in Central America, and has signed an agreement with InterContinental, a sub of Bass Hotels, to operate a casino in Venezuela. Thunderbird is signing media partners to fund millions of dollars in advertising for a share of net revenue.
16. CRYP has signed a licencee agreement with a major Argentinean gaming company with more than 20 land-based gaming facilities. Along with Thunderbird, this gives CRY strong coverage of the Central and South American markets. For competitive reasons, the licencee has asked not to be named until the launch of their online casino.
17. CRYP has signed a licencee agreement with eBet Online, a sub of eBet Limited " their second licencee in Australia. eBet (a listed company in Australia and New Zealand " symbol EBT) is an Internet agent for both New Zealand TAB (race and sports betting) and lottery operator Tattersall’s. They will target existing customers, as well as the European and Asian markets for online casino gaming.
18. CRYP has most recently signed a licencee agreement to launch Kiwi Casino for Christchurch Casinos Limited, a land-based casino group in New Zealand. Christchurch is co-owned by Skyline Enterprises of New Zealand, and the Aspinall Group of the U.K. Christchutch’s chairman, Barry Thomas, said "CryptoLogic’s technology is second to none."
19. CRY’s current software (version 3) includes 3-D elements and live-chat with other players for some games. Version 4, to include new games, avatars and other enhancements has been released to Intercasino, and will follow to other licencees in order of size.
20. CRY software is the best-reviewed casino software, including 3 ½ Aces (out of 4) rating from Rolling Good Times (http://www.rgtonline.com), the highest rating of any online casino, and Green Light rating from PC Computing magazine.
21. CRY purchased Gamesmania, a leading web-gaming (non-gambling) site, for about $450,000, and sold its interest for $1.7 million in cash and stock in the purchaser, Hip Interactive (recently listed on the TSE).
22. CRYP owns a 4.3% interest in creditcards.com.
23. CRYP processed over $1.6 billion in secure deposits in 1999 for its licencees.
24. CRY had revenue of $12.5 mm in 97, $22.9 mm in 98, $32.7 mm in 99, and $18.1 mm in the first half of 00. In 2000, net margins are running at 45-50% of revenue, so net income after tax from continuing operations exceeds 45% of revenue.
25. CRY had fully-diluted earnings per share of $0.43 in 97 ($0.63 before unusual items), $1.10 in 98 ($0.94 before unusual items), $1.35 in 99 ($1.31 before unusual items), and $0.58 in the first half of 00.
26. CRYP has shares outstanding of 14.4 mm, (15.6 mm fully-diluted).
27. CRYP had cash of $39.8 mm plus restricted cash of $14.0 mm as of 00.06.30, and no debt. The company is looking for potential acquisitions, including possible consolidation within its own industry.
28. CRY announced a normal course issuer bid in 1999 to buy back up to 5% of its shares. The bid was renewed in May 2000 for another year. They have purchased around 210,000 shares under C$20.
29. CRY is covered by 4 analysts. Sprott Securities rated CRY a strong buy, with a target price of C$95. CTI Capital set CRY’s target price at C$100. Pacific Growth Equities introduced coverage in May with a buy rating and a YE:00 price target of US$50. Sidoti recently reiterated its buy rating with a target of US$37.
30. CRYP is included in Investor’s Business Daily’s E-Commerce Index.
31. A bill to ban Internet gambling has been sponsored by Senator Kyl. It died in the last Congress, but has been re-introduced. It has passed the Senate, but the House version (the Goodlatte bill) recently failed a vote that required a 2/3’s majority to pass. The House may vote again on this bill. There are mixed opinions on its prospects, but it has kept name-brand casinos from entering this market.
32. A competitor, Starnet, was raided by the RCMP in August 1999. No charges have yet been filed, but if filed they could relate to gaming in Canada.
33. The market is growing, with analysts projecting various growth targets in the range of 100% a year.
34. As Andrew Rivkin, President and CEO says: "CryptoLogic enters year 2000 stronger than ever, with market leadership, industry-setting technology and a focused growth strategy that will enable us to further strengthen our premier position in the global Internet gaming and e-commerce markets."
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